New budget keeps present government’s last year in mind: Muhith

Finance Minister Abul Maal Abdul Muhith is going to place a budget that is expected to lay the foundation of Prime Minister Sheikh Hasina's present government's last budget by increasing revenues, stepping up exports and keeping intact government participation in social security measures to cope with the pressure of a big budget.

Abdur Rahim
Published : 26 May 2016, 08:25 PM
Updated : 26 May 2016, 08:39 PM

In a pre-budget interview to, the finance minister spoke on these issues which create optimism but he said little about initiatives to improve the investment climate and the much discussed banking sector.

The octogenarian finance minister appeared buoyant during the interview held in his own chamber in the Secretariat. 

"I am preparing the budget this time keeping our government's last financial year 2018-19 in mind. I have already decided to place a Tk 5-trillion budget in the final year. Henceforth, every endeavor of ours will be tailored to that end."  

Muhith will place the next budget in the National Parliament on June 2. This will be his 10th budget, eighth of them being consecutive ones.

He said the proposed budget would be to the tune of Tk 3.5 trillion in keeping with a growing economy. This is about 15 percent more than the current budget. You are about to present a budget of about Tk 3.5 trillion. You had set a high target for revenue collection but that has not been fulfilled. The target has already been reduced. Are you again setting a big target in the new budget?

AMA Muhith:
Let me say at the onset that this is the eighth budget of the coalition government led by Prime Minister Sheikh Hasina. I presented seven, and I am going to present the eighth.

I have seen the revision of the 2015-16 budget in which revenue collection fell eight percent short of the target. Naturally, I am very worried. In the very first year, I had emphasised on a big budget. You cannot provide a large amount of services unless the budget size is big. Thanks to Allah, the budget size has, by and large, increased.

The first budget of the Sheikh Hasina government I presented was of Tk 9.2 billion. The one this time will be of Tk 3.4 trillion. The difference between every head in the current year's budget and the new one is considerable. I have fixed the revenue target keeping the last years in mind...the target, as a whole, is big. You had named the current budget 'Bangladesh on the steps to prosperity:  paving the path of high growth'. What do you have in mind regarding the new budget?

AMA Muhith: When we came to power for a second term some years back, I gave friends, colleagues, secretaries an idea of where we want to go in the coming years. The 2018-19 financial year is the last year of our government. That is our target year. I have tried give my colleagues an idea of what we want to attain within that year.

I have already planned the 2018-19 budget. If I live that long, I would like to present it. And that budget will be to the tune of Tk 5 trillion (laughs). That's my dream. But it all depends on my capacity. At this moment... fortunately... I am very cautious after a stroke. What GDP growth rate do you foresee this time?

AMA Muhith:
Growth (GDP growth) has been good this time. I am not fixing anything big for the next year. I am sticking to what should be normal. The performance this time focused on a very solid ground. As a result, the goals for the coming years will more or less conform to what we have envisaged.

In the current year, we had fixed a growth rate of 7 percent. That will be exceeded. This time it will be a little more. We will settle for 7.5 percent. A new law comes into force from July1 that will impose a VAT of 15 percent. But businesses are opposed to that. Will you amend the law under the circumstances?

AMA Muhith: That's troublesome. I will not say anything now. I will not be able to operate a system without the cooperation of those who are going to pay. Let’s wait for a few days. Seven days... When will every citizen get social security?

AMA Muhith: Social security for all. I don't think it will be there by our last year. There will be a bigger net this year... This will continue to grow in the next two years also. But a complete social pension system that covers all ... I am not sure... whether it can be done in 2019-20. But ground will be very good. I will keep an eye, then, by 2021, it will be possible to provide a complete pension system that covers all. You have emphasised the infrastructure sector from the beginning. The Padma Bridge, flyovers are being constructed with our own funds. But the airway, which we use to export a large portion, is in bad condition!

AMA Muhith: You're right; very bad. We are going to touch it now. It's very bad, and there is no reason for it to be so. There is not even a good warehouse in the airport. We'll start from next year. Very big export…It even looks odd…open under rainfall, only plastic sheets…no no, it's not acceptable. I shall start changing that this year.  Fifty percent of the government incentive goes to the readymade garment sector. Are you thinking about something else for this?

AMA Muhith: We spend around Tk 3,000 crore to give export incentive in many sectors including RMG and agriculture. We give five to 20 percent incentive and increase the amount every year. But it becomes difficult to give the incentive if the exports do not cross a mark. Now we have included the shipbuilding industry. We'll do something like that. Will you say something in the budget about Bangladesh becoming a middle-income country?

AMA Muhith:
Of course. We've already become a middle-income country. But it is the UN that defines our status. They have a mechanism. The decision will be taken by 2018 and it will take some more years to be finalised. We will formally be declared a middle-income country by 2021.

Then what I've said about the UN SDGs…2030 is an average time. Considering the current condition of Bangladesh, if we can maintain our pace, we shall realise the targets by 2024, six years before… There were new things like PPP fund, district budget, gender budget in all your budgets. What is new factor you are introducing in this budget?

AMA Muhith: We've failed in district budget…I am sorry, we've failed. But my target was fulfilled. My objective was to see where we are standing in a district…. what are we collecting in a district. I didn’t even try it. It's very difficult… the objective was to find out the activities in the districts - what kind of investments are needed. I knew I wouldn’t be able to do it, so I didn’t try. The target was to find out what kind of activities occur in a district and what investment is needed there. The ultimate purpose is to have a system of district administration.

District administration…yes, you'll get enough resources. We won’t object if the central government sends them after having a good mechanism to collect taxes. Let them do it. It will be through division of resources.

But I have another proposal, about land records. We are already digitalising land records. The process will be complete by one or two more years considering the pace we are going, I believe. If I can streamline the land records, the land related income of the government like land taxes, land revenue, transfer of properties, you can transfer totally to the districts. I'll speak about it in the budget …. about the future of district budget. You brought surprises in all your previous budgets. What is the surprise this time? 

AMA Muhith: Hahahaha!…I can't say. I won't say anything about the surprise. You'll see if there is one when I place the budget on June 2. You faced embarrassing situations due to incidents like the Hall-Mark scam involving Sonali Bank and the BASIC Bank scam in the banking sector. You had announced you would form a banking commission in the current budget. What are you thinking about the sector this year?

AMA Muhith:
Banking services are now provided through a vast…It's a big success. And those were excesses, besides embezzling money. I thought of having a banking commissioner, but I could not do it. Let's wait and see. We can know about that at any time of a year. I think there should be a review of the banking sector during our term. The growth of the sector has increased so much in our term…lots of utility transfers to the e-method. These need a review, I believe. I wanted to include that in this budget, but in the last moment I didn’t. There was a hacking theft…I didn't want to add a new problem to this situation. You are talking about a separate budget for the megaprojects. What will be in this budget for the big projects? What will be the benefit?

AMA Muhith: It will be a budget of eight projects. During the year, two or three more projects will be added. There is no profit…only you are giving emphasis on this in the budget. I hope the outcome of this is that there will be some new systems in their internal administration. What will there be for the environment? You have introduced Green Taxes, but it was not launched.

AMA Muhith: There will be many things for environment, climate change in the budget. But what I did with the Green Tax could not succeed. You said education and health sectors would get extra allocations. How much bigger will the raise be?

AMA Muhith: Of course education and health will get extra allocations. They also have their own thoughts. Those will be reflected on. There was separate allocation for the erstwhile enclaves in the current budget. What will be the allocation for them this time?

AMA Muhith: Yes…we should keep something for them. They suffered for 47 years. Now it's our duty to help them develop. Bangladesh has been experiencing a downturn in investment for a long time. You have tried much, but there is not much response. What are you keeping in the budget to raise investment?

AMA Muhith: The initiatives we have taken so far will continue. There will be continuity. But there have been developments…the environment is good. It seems that the investors are gaining confidence…now the investment will rise. What hopes are you are keeping in the new budget?

AMA Muhith: Hopes…We've already crossed a circle. We have reached 7 percent GDP growth from 6 to 6.5 percent. It's a great success. And we want to maintain it.

In the last year of the Bangabandhu's daughter Sheikh Hasina's government.   We want to give the people the 'Bangladesh of our Dreams'. Thank you, sir.

AMA Muhith: Thank you, too.

( Staff Correspondent Suliman Niloy helped conduct the interview)

Toufique Imrose Khalidi
Editor-in-Chief and Publisher